Lagardère Media acquires Virgin Stores in France

This morning, Arnaud Lagardère and Richard Branson unveil the terms of their agreement on the sale of Virgin Stores, a French subsidiary of the Virgin group, to Lagardère Media, via its subsidiary Hachette Distribution Services (HDS).

According to Arnaud Lagardère: “This agreement stems from an alliance between two major players in the cultural and communications domains which share identical values: the same brand culture and the same entrepreneurial spirit“.

The three key points of this initial agreement are:

• The acquisition by Lagardère Media via HDS of the 16 Virgin Megastores in France,
• The acquisition of an exclusive licence by Lagardère Media via HDS to use the Virgin Megastore brand in public transport areas,
• The obtention by Lagardère Media via HDS of an exclusive licence for the use of the Virgin brand in the distribution of cultural products in certain European countries.

In Arnaud Lagardère’s opinion, (picture  © J. Grison / Rapho )

“Virgin’s extraordinary saga, under the leadership of Richard Branson, will find new forms of expression and go on to new conquests with HDS and as part of Lagardère Media. With Virgin, our Group now has a new label, one that is youth-oriented and enjoys a high market profile, and which will be a valuable addition to our portfolio of brands well-known in Europe and around the world“.

For Richard Branson (picture  © DR) :

” We’re proud of what our staff and Virgin have created with the Virgin Megastores in France. They are now perhaps the most respected music retail shops in the world.

In addition it binds Virgin and Lagardère closer together. Virgin plan to launch Virgin Mobiles here in France and this deal gives us access to their differents stores. And through Lagardère’s involvment in Airbus, Virgin have bought 2 billion dollars worth of A 340 / 600 and committed to the giant A380.“

The purchase of Virgin Stores by Lagardère Media gives HDS 37 stores generating total annual sales of € 365 million (nearly FRF 2.4 billion), to be further strengthened by the opening of new stores over the next two years, along with additional jobs. The arrival of Virgin Stores will therefore drive growth and profitability in this major division of Lagardère Media.

According to Arnaud Lagardère, “Our strategy, based first and foremost on content, is reliant on the balanced development of our four divisions (Press/Magazines, Publishing, Audiovisual/New media and Distribution/Retail). Due to its countercyclical positioning, as well as its cash generation capability, HDS is a key factor behind Lagardère Media’s growth. In this context, the acquisition of Virgin Stores is an essential element in our media strategy. Moreover, this agreement strengthens HDS in its retail travel business”.

For Jean-Louis Nachury, Chairman and CEO of Hachette Distribution Services : “Our agreement with Virgin provides us with a tremendous opportunity to step up the growth of our strategic businesses in France and abroad”.

Jean-Noël Reinhardt, formerly chairman and CEO of Virgin Stores, will be taking up the post of chairman of the new organization formed by Virgin Stores, Extrapole and Furet du Nord. Richard Branson will remain as a member of the Board of Directors of Virgin Stores, and will be sitting with Arnaud Lagardère on the Supervisory Board.

• About Virgin Stores and the Virgin Megastores:

VIRGIN STORES

Virgin Stores, a French subsidiary of the Virgin group, has stepped up its growth since 1997. Today it has 16 stores and in 2001 will generate total annual sales of € 212 million (FRF 1,390 million), not including VAT, with an EBITDA of nearly 5%. For the second consecutive year in 2001, Virgin Stores’ sales have risen by nearly 20%. The commercial drive of Virgin Stores is demonstrated by its expanding annual sales (adjusted on a like-to-like basis): up 6% in 1999, up 11% in 2000 and up 9% in the first half of 2001.

VIRGIN MEGASTORE
The history of Virgin in France is encapsulated in the extraordinary impact of the Champs-Elysées Megastore. Opened in 1988 by Richard Branson and Patrick Zelnik, it revolutionized the highly conventional manner in which cultural products were sold until that time. The Megastore puts products on show rather than just on shelves: it makes the store a monumental, magical place where you can look, listen or simply walk around, a dynamic place where sales stop for concerts, where performers, film directors and writers come to meet their audiences, a media store which adapts to current affairs and events. It is this capacity to follow and anticipate each beat of the cultural heart that is behind the success of the Megastore concept for which the Champs-Elysées store was the vehicle. Thirteen years after its opening, it generates annual sales of nearly € 100 million, not including VAT, over only 3,200 square metres of selling space. From this autumn, its 3 million existing customers will be able to enjoy an extra 800 sq. m of sales floor. Visit Virgin.fr

• About Hachette Distribution Services :

Hachette Distribution Services (HDS)

is an international group specialising in the sale and distribution of cultural entertainment products. HDS operates a network of 3,600 stores and is the world’s leading company in retail media sales.

Extrapole and Furet du Nord, acquired by HDS in 1998 and 1999 respectively, have 21 outlets and will register net sales of € 150 million (approximately FRF 1 billion) in 2001, with an EBITDA of 3.5%. The average increase in turnover for these two chains during the first half of 2001 has been 21.1% (sales for continuing businesses).